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January 30, 2019  

NY Tower Pitched as Play on Amazon Campus

An Angelo, Gordon & Co. partnership is marketing a Midtown Manhattan office tower valued at about $700 million.

The roughly 730,000-square-foot building, at 575 Lexington Avenue in the Plaza District, is 88% leased. The estimated value works out to some $960/sf. Cushman & Wakefield has the listing.

The marketing campaign is touting the property’s proximity to one of Amazon’s two planned East Coast campuses. That complex will be one subway stop away, across the East River in the Long Island City section of Queens, N.Y.

Amazon is expected to create as many as 40,000 technology jobs at the site by 2034. Cushman projects that each position will create one to two additional office jobs for suppliers and other companies related to Amazon. The brokerage is telling potential buyers that buildings on Manhattan’s East Side with quick access to Long Island City will be able to attract some of those prospective office tenants. The subway station that connects to Long Island City can be accessed from inside 575 Lexington.

New York-based Angelo Gordon owns the 35-story building in a partnership with fund operator Normandy Real Estate of Morristown, N.J., and George Comfort & Sons of New York.

The group is wrapping up a roughly $50 million renovation that has included upgrades of the main entrance, lobby, elevators and mechanical systems. An amenity center for tenants was also added. A buyer would have the option of constructing terraces on floors where the building has setbacks.

The renovations have helped the partnership negotiate some 300,000 sf of leases over the past three years. WeWork signed a 117,000-sf lease late last year. The largest tenant, Weill Cornell Medical College, recently expanded its space to some 200,000 sf and extended its lease for about another 10 years. Other tenants include Schimenti Construction and law firm Warshaw Burstein. There is also street-level retail space, whose tenants include drugstore chain Duane Reade, bakery Maison Kayser and New York Sports Club.

The building is on the east side of Lexington Avenue, between East 51st and East 52nd Streets. It was constructed in 1958. California State Teachers and New York developer Larry Silverstein acquired it in 2006 from New York-based Koeppel Cos. for $416 million. In 2012, New York Life, PGIM Real Estate and Normandy acquired it for $360 million, or $483/sf. In 2015, Angelo Gordon and George Comfort bought out New York Life and PGIM, while Normandy retained its roughly 25% stake. That recapitalization valued the building at about $510 million, or $685/sf.